DOJ Internet gambling ruling splits tribes

An Obama administration ruling that opens the door for states to allow some online gambling could prod lawmakers to pass federal Internet poker legislation — a prospect that’s dividing Indian tribes that depend on gaming for their livelihoods.

Some tribes see the ruling as a potential business opportunity, creating a chance to expand their gaming operations to the Web. But others who don’t have money to invest in online sites, say they can’t compete with flashy Las Vegas sites or fear cannibalizing brick-and-mortar gambling operations.

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Tribal leaders and American Indian casinos, however, mostly agree that federal online poker legislation as written — which would make online gaming legal across the land, except in states that opt out — would squeeze tribes too hard.

“Now they are concerned that this ruling is going to be the impetus for the federal legislation,” said Penny Coleman, a lawyer who represents tribal nations. “They’re worried there’s going to be this big push now.”

The Justice Department, in a blockbuster ruling days before Christmas, removed years of ambiguity from federal law and gave states the green light to start cashing in on intrastate online gambling systems that don’t include sports betting.

States are already lining up. So are American Indian tribes.

The casino gaming industry, however, stands to lose if it can’t offer online gaming in every state — a possibility that a blanket federal law authorizing poker sites would preclude. And casino and poker lobbyists are expected to press Congress to pass Internet poker legislation before a number of states pass online gambling bills of their own during upcoming legislative sessions.

Tribal leaders “know Nevada doesn’t want to stay within its borders,” said Coleman, a former acting general counsel for the National Indian Gaming Commission under the last three administrations.

That expected push — and a fear they’ll be marginalized as big gaming interests have their way — has some tribes clearly worried.

At a Senate hearing in November, tribal leaders told lawmakers they want a seat at the table as Internet poker legislation is drafted.

They said bills under consideration give states like Nevada and casinos like Caesars Palace an inherent leg up in the online gambling game. They also voiced concerns about being taxed or regulated by the feds.

Still, not every tribe viewed the DOJ ruling as a bad omen. Some California tribes that have long wanted to offer online gambling in the Golden State welcomed the Justice opinion, Coleman said.

But in states where population is low, tribes are “not going to see the same economic benefit,” she said.

“A few sites and tribes will benefit and whole bunch won’t,” she said.

Of the roughly 200 tribes whose livelihoods depend on their gaming operations, only a handful have the resources to quickly set up Internet gambling sites in response to the DOJ ruling.

The Mohegan Tribe in Connecticut is on that short list.

Tribe Chairman Bruce “Two Dogs” Bozsum said his tribe has been preparing for an online gaming scheme for years. And after the DOJ ruling, Connecticut lawmakers have already floated the possibility of passing an Internet poker law, according to media reports.

Bozsum said he also met recently with Connecticut Lt. Gov Nancy Wyman to pitch online poker.

“This is already happening, it just needs some regulation,” he said. “Let’s get things in place and catch up to the rest of the world as far as Internet gambling goes.”

In Connecticut, two American Indian tribes are the only entities allowed to offer gambling in the state. That means they’ll also be the only two that can operate online gaming systems, leaving the Las Vegas casinos scene watching from the outside in this particular situation.

But Bozsum isn’t opposed to the federal law that would potentially pit his casino against Las Vegas giants. He thinks tribes can band together and compete online with the biggest gaming companies.

He even testified at the Senate hearing in November in favor of a federal law that considers American Indian concerns, and said in an interview that a state-by-state system could wind up being more complicated.

It could also ultimately limit the opportunity for tribes to spread their poker sites nationally.

“California wants it to be only in the state. I look at that as unfair to smaller states like Rhode Island or Montana,” he said. “When I look at the World Wide Web and anything that’s done there, I think of no boundaries.”

This article first appeared on POLITICO Pro at 5:34 a.m. on January 5, 2012.

Readers' Comments (11)

Indian Country is not ready for online gaming. They have been made aware of the issues it would cause for them and they basically have neglected it, unfortunately.

The problem is very short term thinking on their part and it will critically injure their businesses and their communities if they don't make a change quickly. And frankly, many of their primary current suppliers are not helping the matter by giving them some very bad advice. Very sad. @gaminglawyer

It's about time they legalize online gambling, I'm no gambler, but the fact is people can already gamble online at foreign casinos in foreign countries, which just robs America and the government of revenue & tax money. Sticking your head in the sand and pretending it doesn't exist, or arresting everyone who does it anyway (similar to marjiuana) won't stop it from happening.

The question thats on everybody's mind is Jobs. Will online gaming create Jobs ? The Internet is a two way street . Who is going to block Canada and Mexico from marketing into the USA and to all States including Native American Casinos? We are talking about all types of Gaming not just Poker.The top three Gaming Companies are for the passage of a Federal Law but have already out sourced their Software. MGM with Party Poker and Caesars Entertainment with 888 gaming. California with Playtech not one Job .IGT has outsourced their software to Europe. So I ask what JOBS? The law should require American Software and new development that will put people to work. Another issue is Age? A few American Indian Tribes allow Students 18 years of Age to Gamble and that needs to be reglated .

The question thats on everybody's mind is Jobs. Will online gaming create Jobs ? The Internet is a two way street . Who is going to block Canada and Mexico from marketing into the USA and to all States including Native American Casinos? We are talking about all types of Gaming not just Poker.The top three Gaming Companies are for the passage of a Federal Law but have already out sourced their Software. MGM with Party Poker and Caesars Entertainment with 888 gaming. California with Playtech not one Job .IGT has outsourced their software to Europe. So I ask what JOBS? The law should require American Software and new development that will put people to work. Another issue is Age? A few American Indian Tribes allow Students 18 years of Age to Gamble and that needs to be reglated .

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